May 24, 2002 — CMS Energy Corp.’s Board of Directors on Friday announced the resignation of William T. McCormick, Jr., as chairman and chief executive officer.
The company is also establishing a special committee of independent directors to investigate matters surrounding round trip trades conducted by the company’s energy marketing unit, CMS Marketing, Services and Trading (CMS-MST).
The Board elected Kenneth Whipple, retired executive vice president of Ford Motor Co. and a member of CMS Energy’s Board of Directors, to succeed McCormick as chairman and chief executive officer.
The committee, whose membership will be established within the next ten days or so, will retain outside counsel to assist in the investigation.
CMS Energy Corporation is an integrated energy company which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, independent power generation, oil and gas exploration and production, and energy marketing, services and trading.
For more information on CMS Energy, please visit our web site at: www.cmsenergy.com/
The board has also appointed Ernst & Young LLP to audit the company’s financial statements for the year ending December 31, 2002.
CMS Energy has been the subject of shareholder class action lawsuits, it has received a subpoena from the U.S. Attorney’s Office for the Southern District of New York related to round trip trading, and said it will soon receive a subpoena from the U.S. Attorney’s Office in Houston, which also is investigating these matters.
CMS Energy said it is cooperating with the Securities and Exchange Commission’s investigation of round trip trading with another trading partner and will also cooperate with inquiries by the Commodity Futures Trading Commission and FERC related to these matters.
The company plans to amend its 2001 Form 10-K and restate its financial statements for 2000 and 2001 to eliminate from revenue and expense all of the effects of round trip trades.
None of the restatements will affect earnings or cash flows for either period. CMS Energy expects the restatement to simultaneously eliminate approximately $1 billion of revenue and expense from round trip trades in 2000.
The company previously reclassified 2001 financial statements to eliminate $4.2 billion of revenue and expense, which included $3.3 billion of previously reported revenue and expense from round trip power trades. The other $900 million of revenue and expense which was reclassified resulted from an incomplete round trip gas trade.
The restatement will also adjust the year end 2001 balance sheet for offsetting receivable and payable amounts of $122 million related to round trip trades, and will restate 2001 revenue and expense of $5 million inadvertently missed in the 2001 restatement.
CMS Energy announced it is exploring the feasibility of extinguishing those round trip trades that remain open positions on its books. Extinguishing these open positions will have no impact on earnings or cash flow.